Macy's CEO Terry Lundgren testified in court that he hung up on Martha Stewart after she called to tell him that the company which bears her name had just signed a deal with rival J.C. Penney. According to Lundgren, he has not spoken to her since, even though the two used to be good friends.
Lundgren testified on Monday in the trial of two Macy's lawsuits over the merger. He said Stewart told him of the deal one night before J.C. Penney publically announced it on Dec. 7, 2011. J.C. Penney also said it would launch Martha Stewart boutiques in about 700 department stores during 2013 and bought 17 percent of her company, Martha Stewart Living Omnimedia.
"I was completely shocked and blown away," Lundgren said. "I was literally sick to my stomach."
Macy's, who has their own deal with Stewart, sued her company in January 2012 for breach of contract and later sued J.C. Penney. Macy's claims they have exclusive rights to sell Martha Stewart products in certain categories, including cookware and bedding.
The cases were consolidated for a non-jury trial before Justice Jeffrey Oing in New York state court in Manhattan.
Lundgren said that at the time he considered Stewart a friend and that he has not "responded to her since that phone call on Dec. 6. And I don't intend to."
Macy's is still committed to their business relationship with Martha Stewart Living Omnimedia, however. The Martha Stewart brand at Macy's grew 8 percent last year, twice that of Macy's as a whole, Lundgren said.
"This is an extremely important brand, and we are going to continue to highlight the brand in our stores," Lundgren testified.
Macy's actually built Martha Stewart to its No. 1 home brand after Stewart left prison in 2005, having served time for lying about a stock sale.
The new Martha Stewart shops in J.C. Penney stores are set to open in May. They are to be the centerpiece of an improved home goods section that Chief Executive Ron Johnson has called crucial to returning J.C. Penney’s to a profitable store.
Lundgren said Stewart told him in their last phone conversation that she could not give him any prior warning because her negotiations with J.C. Penney were strictly confidential. Stewart said she had to take action because her company was in trouble.
Johnson is scheduled to take the stand on Friday. Martha Stewart also is expected to testify, although it is unclear when.
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Source: (Chicago Tribune)